The pandemic was a boom time for food delivery as Britons relied on apps such as Deliveroo to get dishes brought to their door. But that convenience comes at a price, as consumers are often being charged higher prices – in some cases almost a third more – on takeaway menus as well as service and delivery fees.
Using apps such as Deliveroo, Uber Eats and Just Eat will often cost more than if you were ordering the same food in a restaurant or cafe, because restaurateurs say they need to make up for the fees levied by the apps, which are frequently around 30% of the price of the order.
In one case, a fish and chip takeaway in St Andrews charges £11.20 for haddock, chips and lemon if the customer orders in the shop, but £14.40 if they go through Deliveroo.
Wendy Napthine Frame, owner of Cromars, says this is to make up for a 29% fee the delivery service charges.
Deepak Shukla, who owns three cafes in south London, charges £3.90 for a cappuccino on Deliveroo and Uber Eats, but £3.10 if a customer comes through the door. A toasted sandwich is £6.50 on the apps and £4.90 in store. That means a lunch is 30% more to order from home.
“We inflate prices to support the fact that Deliveroo take a commission,” he says. “Otherwise, you’d make a loss after paying staff, as well as bagging and tagging.”
The use of delivery apps rose sharply during lockdown as restaurants, pubs and cafes were restricted from serving diners in person on their premises. In the first half of last year, Deliveroo doubled its customer orders compared with 2020. Just Eat saw similar rises across Europe.
Customers typically pay a delivery fee and a service fee; the service fee is a percentage of the order before discounts are applied. Uber Eats charges 10% with a minimum of 99p and maximum of £2.99; Deliveroo’s 5% has a 99p minimum and £2.49 maximum; Just Eat’s is 5% with a 50p minimum and £1.99 maximum. The delivery fee is usually based on how far from the restaurant you are.
We have had to increase our delivery app menu prices by approximately 20% in order to surviveRahul Sharma
Rahul Sharma, owner of The Regency Club, an Indian and Kenyan bar and grill in north London, says chicken biryani costs £11.95 if ordered in the restaurant or for takeaway. Using Uber Eats, however, this increases to £15.30. He has raised the price similarly when using the other platforms. After a delivery fee and a service fee – which changes by customer – the total comes to £18.12.
“We pay 30% commission to aggregators and they charge the customer a delivery fee and service charge,” he says. “To compensate for the unprecedented increases in cost, along with high fees from the aggregators, we have had to increase our delivery app menu prices by approximately 20% in order to survive; otherwise to be listed on an aggregator’s platform is just a costly marketing exercise.”
David Fox, co-founder of the Tampopo chain of restaurants, which has five locations in London and Manchester, says they raise prices by up to a pound on their main courses on their Deliveroo menu.
View image in fullscreenWendy Napthine Frame, owner of Cromars fish and chips, has had to raise prices to make up for a 29% delivery service charge
“Restaurants and takeaways have to pay between 25% and 40% of take-out sales through delivery platforms,” he says. “If take-out is a significant part of the total sales of a high street business, then that is a problem.”
But Peter Backman, a restaurant consultant, says not all restaurants charge extra, especially big chains where the price of the dishes are well-known to the consumer.
While customers do not have to pay the higher prices, many are prepared to, he says, especially since the lockdowns. “Delivery really took off in a huge way because it was the only way you can have a cooked meal that you haven’t prepared yourself. And the ‘premiumisation’ [paying more than you would have paid in the store] also went up,” says Backman.
“There is a whole class of customer for whom the convenience of being able to just pick up the phone and have a hot meal delivered within half an hour, or whatever it is, is a huge benefit. And they’re prepared to pay.”
Commission rates charged by Deliveroo vary depending on what type of service the restaurant or takeaway uses – such as whether they have their own couriers or use the company’s.
Restaurants which just use Deliveroo, instead of several services, often get better rates. “We encourage restaurants to set the same menu prices as they offer customers when dining in,” says Deliveroo. “Partnering with Deliveroo means restaurants do not, themselves, need to provide delivery services, fund marketing campaigns or customer services – we firmly believe our commission rates are competitive for the service provided.”
Just Eat typically charges 14% to a restaurant if consumers collect their own order, or if it is delivered by couriers from the restaurant.
View image in fullscreenDeliveroo doubled its customer orders during the pandemic when people couldn’t go out to eat. Photograph: BMD Images/Alamy
Restaurants that use Just Eat’s delivery network pay an average of 30%. It says: “Just Eat is only successful if our restaurant partners are successful. Our commission rates remain competitive, and despite rising external costs, our rates for marketplace restaurants have not changed for the last five years in the UK.”
Uber Eats says: “Commissions cover a wide range of essential services for restaurants, from processing payments to supporting couriers, as well as providing dedicated customer support.”
Consumers who want to order direct from their local takeaway can find a list of them with links on the site StraightFrom.com, operated by Flipdish, a tech company which gets restaurants’ ordering systems online.
The soaring cost of Friday fish and chips
The price of a Friday night fish supper has gone up and is set to rise even more as costs of supplies, from fish to mayonnaise to packaging, go up.
Chippies have come under increased pressure as the war in Ukraine, the cost of living crisis and spiralling energy costs combine.
Wendy Napthine Frame, owner of Cromars Fish and Chips in St Andrews, says it has increased prices by 10% and could be forced to hike them more in the near future.
“Oil has doubled over the past few months. This is the biggest increase in our core ingredients. Mayonnaise that we use for our tartare sauce has increased. Our own batter mixture too has gone up due to the cost of flour,” she says.
The war in Ukraine has brought uncertainty about the supply of cod and haddock from the sea north of Norway and Russia.
Mark Polley of the Northern Irish chip-shop chain John Dory’s says fish costs have gone up 90%. “Of the whitefish that landed in the UK, 45% came from Russia and that is what supplies the chip shops. So it’s not available. [The high] oil price is also due to shortage as a lot of sunflower oils are from Ukraine. It also puts pressure on rapeseed oil, which had a very bad crop this year.”